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Each individual has a risk threshold that should not be omitted. Any good stock broker or financial planner recognizes this, and they should make the effort to help you determine what your risk tolerance is. Then, they need to operate with you to find investment vehicles that do not exceed your risk tolerance.

Determining one's risk threshold involves many different things. First, you should know how much money you have to invest, and what your investment and financial objectives are.

For instance, if you have to retire in ten years, and you've not saved any money towards that end, you need to have a high financial risk tolerance - because you have to do some aggressive - risky - investing in order to attain your financial goal.

On the other side of the coin, if you are in your early twenties and you want to start investing for your retirement living, your risk tolerance will be less. You can afford to observe your money grow slowly over time.

Realize of course, that your demand for a high risk tolerance or rather your need for a low risk tolerance really has no bearing on how you consider risk. Again, there is a lot in determining your tolerance.

For instance, if you invested in the stock market and you observed the movement of that stock every day and saw that it was declining slightly, what would you do?

Would you trade out or would you let your money go off? If you have a low tolerance for risk, you would want to sell out... if you have a higher tolerance, you would let your money ride and see what are the results. This is not in response to what your financial goals are. This determination is based on how you feel about your money!

Again, a good financial planning consultant or stock broker should help you find out the level of risk that you are comfortable with, and help you select your investments accordingly.

Your risk tolerance should be according to what your monetary objectives are and how you feel about the likelihood of missing your money. It's all tied in with each other.

A good financial planner can also advise you on the risk elements of various kind of investment vehicles like venture capital and seed money investing versus making an investment in a company going public, or a reverse merger, or other public mergers.

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